The dream of drilling in Wayne is fading

HONESDALE - Four years ago, Hess employees slathered barbecue sauce on ribs and cut a cake adorned with the gas company's logo at the Wayne County Fairgrounds to celebrate the closing of a monumental deal.

The 1,000-plus members of the Northern Wayne Property Owners Alliance had signed over more than 100,000 acres to Hess for potential gas development. Envisioning the riches they might make, they handed out "Drill Now" T-shirts and "I (heart) Marcellus Shale" bumper stickers at the barbecue.

Owners alliance president Bob Rutledge now has them tucked inside boxes in his basement following last week's surprising announcement by Hess, and its joint development partner, Newfield Exploration Company, that they are bailing out.

The companies did not cite reason, though a Newfield spokesman cited the low market price for natural gas and the company's desire to redirect its focus to its oil interests elsewhere in the U.S.

"It was a pretty exciting time. It was a long time awaiting," said Rutledge, who had hoped Hess would tap a production well on his Damascus Twp. property. "We just didn't grab the first money that came to our door."

A Sunday Times review of leases and well permits in Wayne paints a grim picture that the dream of drilling is dying there. The newspaper found:

- The state Department of Environmental Protection did not issue any permits to gas companies this year in Wayne.

- While nine exploratory wells were drilled in Wayne by Hess, Newfield, Stone Energy and Chesapeake, none of the wells were hydraulically fractured and converted to production. The Delaware River Basin Commission's moratorium prohibits gas drilling in the almost 14,000-square-mile basin, which includes nearly all of Wayne, and puts a cap on the number of exploratory wells.

- This and last year, drilling companies dumped hundreds of leases. Records also show companies not renewing leases, or handing them off to other outfits willing to wait out the commission's drilling moratorium enacted three years ago so the agency could develop its own environmental regulations. Before bailing, Hess and Newfield were the biggest players left in the Wayne shale play.

Several years ago, gas companies flocked to Wayne County to secure large tracts of land for potential development. However for two years, new leasing has been nearly nonexistent.

This comes after a leasing surge that began around 2007, and peaked in 2009 and 2010.

It has plummeted since.

For Louisiana-based Stone Energy, a company executive said the commission's moratorium has put the brakes on their gas exploration efforts.

The company still has property leased in Wayne, though they have chosen not to renew some leases, and they are not securing new leases because of the moratorium, said Rick Toothman, senior vice president for Appalachia operations.

They are still interested in gas development in the watershed and are not "writing it off," Toothman said.

However, they do not know if it is wise to go forward because they have not been able to drill more wells to collect data to determine if there is marketable natural gas.

"It would be too early to speculate," he said, whether to "promote it or condemn it."

There are skeptics who do not believe there is commercially viable gas in the basin. Both Stone and Newfield declined to release the results of their exploratory wells. Efforts to reach Cabot Oil and Gas Corp., Chesapeake Energy, Exco Resources and Southwestern Energy Production Co. - the drilling companies that have had leases in Wayne - for comment were unsuccessful.

"For the time being, I would say gas is dead in Wayne County, but there is a lot of cards in that deck," County Commissioner Brian Smith said. "Long term, it's still here; it's still viable."

Smith said the county is struggling to regain its economic footing. Dairy farms and industrial jobs have vanished over the years. At one time, there was nearly 650 dairy farms; now there is about 65, Smith said.

The gas industry could have provided a financial boom, money for infrastructure and residents' pocketbooks.

"We need to be able to pay for school, we need to be able to pay for our cars, we need to be able to pay for our homes," Smith said.

He and his colleague, commissioner Jonathan Fritz, blame the commission.

"I'm wholeheartedly convinced that the natural gas is here and it is the dysfunction and impasse of the DRBC that has prompted these companies to withdraw," Fritz said.

When asked to comment about the moratorium, and the state of drilling in Wayne, commission officials referred to comments made by commission chairwoman Michele Siekerka, who is New Jersey Gov. Chris Christie's representative on the board, during a July 10 meeting. The comments address the research the commission has done since 2011, studying water resource impacts, reviewing regulations and other related matters to "reach consensus on a path forward that provides for the development of a potentially valuable energy source while protecting the vital water resources within the basin."

The commissioners, whose voting members are the governors of Pennsylvania, Delaware, New Jersey and New York and a federal representative from the Army Corps of Engineers, were set to vote on drilling rules in November 2011. The vote never happened.

It has not been rescheduled.

The pullout of Hess and Newfield was a big victory for local environmentalists.

"To be a human being you have to look beyond the money in your pocket," said Barbara Arrindell, director of Damascus Citizens for Sustainability, an environmental group with an office just across the Delaware River from Wayne County in Narrowsburg, N.Y. "Greed knows no bounds, there is never enough. You can't live in a world that's contaminated."

Contact the writer: smcconnell@

timesshamrock.com

@smcconnellTT on Twitter

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